While the company said its on-demand Google Apps service is used by 100,000 business and is being snapped up by 1,000 SMBs per day, the adoption rate among large enterprises is slower due to concerns over security and compliance.
The company already offers spam and malware filtering for its Gmail service, but Postini will bring higher-end functions such as archiving and outbound filtering.
In bigger businesses security and compliance requirements are a must and this is a business Google really wants to take a part in, said Dave Girouard, vice president and general manager of Google’s enterprise business, during a conference call with analysts.
Acquiring Postini, which provides security, encryption, and compliance functionality as an online service for email, the web and instant messaging, is designed to address that concern.
Neither company would discuss product integration plans, but Postini’s vice president of solutions marketing Sundar Raghavan told us that Postini’s services will carry on being offered independently of Google Apps.
Our stated public intent is to offer the Postini pieces a la carte, he said. Existing customers will continue to be supported, he said.
We’re going to make it as easy as possible and as tempting as possible for Postini’s users to try Google Apps, Girouard told analyts.
Postini’s services cover message security, archiving, encryption, and policy enforcement, and can be used to protect email, instant messaging, and other web-based communications.
The company has 35,000 customers on its books and protects 10 million inboxes. Girouard said that there is very little overlap in the two companies’ customer bases.
The acquisition is expected to close at the end of the third quarter when Postini will operate as a wholly owned subsidiary.
Google already had a relationship with Postini. In February the company agreed to integrate its services with the Google Apps Premier edition, developing compliance and management offerings such as message recovery, centralized management, threat management, and archiving.
Raghavan said this work showed that Postini could benefit from the scale of presence and innovation at Google, and that it could benefit from Google’s expertise in user-centric experiences.
Our View
This acquisition is a clear statement of direction in terms of on-demand applications because it is Google’s third largest acquisition (after DoubleClick and YouTube).
Coming in the aftermath of its tie-up with Salesforce.com, it indicates that Google is working to build its credibility as an on-demand application provider, something it needs to do if it is to crack the enterprise market and start challenging Microsoft Office at a serious level. At the moment it is still pulling the pieces together.
The question is whether it can succeed in the application sector as an application provider in its own right or whether it would fare better with a close tie or acquisition of one of the on-demand application providers like Salesforce.com, NetSuite, or RightNow Technologies.
With productivity applications like Office becoming the desktop interface for back- and front-office enterprise applications, Google Apps has to do more than just emulate Office functionality, it also has to be seen as a gateway to enterprise applications.
